Verizon CEO Expects Congress Will Not Renew ACP
Verizon CEO Hans Vestberg sees little possibility that Congress will continue the affordability connectivity program, he told CNBC Monday as the carrier released Q1 results. House Democrats hope they can force a vote on a bill that would keep the ACP alive (see 2404170066). Vestberg told an analysts' call Verizon is happy with its roll-out of C-band spectrum and offered an update about how the company is using AI to improve efficiency.
“It seems like [ACP] will not be renewed,” Vestberg said. As such, Verizon has ACP alternatives, including $20/month FiOS for low-income families and prepaid wireless, he said. “Everyone in this country, regardless of who they are, should have access to wireless and broadband,” he said. Vestberg said Verizon considers low-income customers as a market segment it wants to reach. Verizon stopped processing ACP applications in February, he added.
Verizon executives weren’t asked and didn’t comment on the FCC’s pending vote on net neutrality rules during the analysts' call.
Verizon's results were mixed. It reported 68,000 net postpaid phone customer losses, which was slightly fewer than analysts predicted, but added users of other devices and had retail postpaid net additions of 253,000. Revenue was up 0.2% over last year to $33 billion, slightly below estimates. EBITDA came in at $12.1 billion, up from $11.9 billion a year ago. Verizon’s stock price was up nearly 3.5% in pre-marketing trading but fell 4.67% for the day to close at $38.60.
​“We have the right strategy, and we're working to keep this progress up quarter-by-quarter,” Vestberg said on the call with analysts.
Verizon’s C-band now covers 250 million POPs, hitting the company’s target almost a year ahead of plan, Vestberg said. “The pace and quality of our build out is spectacular,” he said. In the first 76 markets where Verizon offered C-band, the company has seen a higher mix of subscribers taking premium plans and reduced churn, he said. “Our strategy from the start was to build a network once to meet the needs of the present and to optimize it for the future, and we're doing just that,” Vestberg said.
Verizon said it added 354,000 fixed wireless access subscribers in Q1, finishing the quarter with 3.4 million overall. That’s down from 375,000 adds in Q4. Verizon also added 53,000 Fios Internet wireline subscribers.
FWA “is resonating extremely well with the market,” Vestberg told CNBC. “It’s self-installed, it takes you five minutes -- you have broadband at home.” Vestberg noted that businesses as well as consumers use FWA in the carrier’s C-band markets. “Wireless and broadband is so important for every individual and every organization,” he said.
“We have been pleased at how businesses have adopted FWA, and we continue to see strong demand from small businesses and enterprises, which are attracted to the ease of deployment, reliability and the flexibility of the product,” said Verizon Executive Chief Financial Officer Tony Skiadas on the call with analysts.
Vestberg also laid out in broad terms the company’s work on AI during the call. “We have been working with AI for several years, and our powerful network positions Verizon to lead the AI revolution,” he said: “Enabling AI at scale for improved customer service is a key.”
Verizon is using AI to optimize internal processes and operations “through machine learning, such as creating efficiencies in fuel consumption,” Vestberg said. The provider is using AI for “personalized plan” recommendations for subscribers, “which is producing good early results,” he said. Verizon is also “establishing an AI-based revenue stream” by commercializing the network’s “unique low latency, high bandwidth and robust mobile edge compute capabilities.”
Free cash flow was up over last year and the second half of the year “is expected to be better,” said MoffettNathanson’s Craig Moffett. “The bad news is that over the next five years we project revenue growth to be something close to zero (less than 1%) in nominal terms, and well below zero adjusted for inflation,” Moffett said in a note to investors: “We project earnings and EBITDA growth to be negative by both standards. Over the same period, we expect Verizon to continue to lose market share in wireless (even as they gain share from AT&T).”
“Wireless trends were solid, with myPlan [the main wireless subscriber offering] continuing to help postpaid subscriber trends, prepaid improving, and price increases supporting margins,” said New Street’s Jonathan Chaplin: “Broadband shows signs of industry slowdown in both FiOS and FWA.”